Iraq’s first bond auction on July 18 will set interest rates based on actual market conditions. This is the first time free market forces will have a play in setting interest rates in Iraq.
Iraqi banks are scheduled to bid on approximately 150 billion Dinars (about $100 million) worth of government debt.
The auction will set the yield, a widely anticipated standard which will provide commercial lenders a benchmark from which to set loan rates.
The Iraqi Central Bank (ICB) holds about $2.5 billion in Iraqi government debt. The finance ministry will hold auctions every few weeks and state run banks will be limited in their purchasing to reduce the possibility of undue influence.